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Marty Moss-Coane of WHYY's "Radio Times" interviews economist Simon Johnson on the anniversary of the collapse of Lehman Brothers. Johnson believes we're about to enter the boom-bust cycle once again and that President Obama isn't at this time doing what needs to be done to curb Wall Street's excesses.

MMC: On September 14th, President Obama gave a speech at Federal Hall on Wall Street one year after the collapse of the investment bank, Lehman Bros. He warned financial executives not to return to their risky and irresponsible behaviors which led to a world-wide crisis. He reminded them that the government -- taxpayers -- had come to their rescue and may not do it again. Obama also called for more stringent regulation of the financial system. According to news accounts, the audience was not enthusiastic about the president's speech. They applauded just once and otherwise looked as though they wanted to get the heck out of there! So what did we learn in the last year and what are the prospects for meaningful oversight and regulation. To put it another way, are we headed for another financial meltdown?

Simon Johnson is a professor at MIT's Sloan School of Management. He's a senior fellow at the Peterson Institute for International Economics. He was the International Monetary Fund's chief economist and director of its research department.

Simon Johnson, how close were we a year ago to a complete financial meltdown?

Simon Johnson: Well, we had a complete financial meltdown! The credit markets froze. In the week to ten days after the collapse of Lehman, it was very hard for anyone to borrow on any terms almost anywhere in the world. Actually, that is a financial meltdown. We averted some of the worst consequences if that kind of meltdown -- I think through some heroic actions on the part of the Federal Reserve. A massive financial fire was put out and prevented from spreading as widely as it might have through the economy. There's no question we had a meltdown and the damage from that was enormous.

MMC: We're seeing, though, the stock market beginning to inch its way up. It seems to have stabilized a bit. Some are saying that because we didn't have a sustained total collapse that means the system has been fixed. What do you say in response to that?

SJ: [laughing] Well, it's obviously not fixed! I don't think anyone really believes that. President Obama didn't say that on Monday. Actually, his speech was very good at one level. It was very disappointing at another level. But at the level of diagnosis -- at the level of saying, "It's basically a problem of the structure and organization of incentives on Wall Street" -- he absolutely hit the nail on the head. Then he said, "It's not fixed yet," and asked them to please behave nicely going forward -- which of course they're not going to do if left to their own devices! He also outlined his own regulatory program. That's the disappointing part. Those proposals are anemic and weak.

MMC: I do want to get to that, but in terms of the response to the president, are you saying that the president doesn't have the kind of clout to get the financial world to behave instead of taking these risks? Risk not just to the US economy but risk to economies around the world?

SJ: Well, Marty... I don't want to sound exaggerated or outraged or anything! But let me point out that the Wall Street Journal reported the next day that not a single chief executive officer -- not a single CEO of any major US bank -- attended the president's speech. Okay, so every one of them was too busy to come and year him speak? That's incredible, right? That by itself absolutely encapsulates the arrogance of this industry. They're not grateful. They're not sorry. They don't even want to acknowledge that they messed up on a major scale. And the president -- and the president's men and women -- saved their rear ends, their companies, their jobs, their salaries, their bonuses, their pensions, their everything! It was done on amazingly generous terms. I think excessively generous terms. They can't even show up and applaud politely? Extraordinary!

MMC: But when the president said that if this happens again we may not be able to come to their rescue, do you think they believe him?

SJ: No, of course not! The key words there are "may not." The point is that if you run the Fed or the US Treasury and the big financial players as currently constructed are coming to see you on a Monday or late on a Sunday afternoon, and they say, "You know, if you don't give us a big bailout we're going to collapse and the world' banking system will come down with us," and you look them in the eye -- maybe they're bluffing, maybe they're not, maybe they know what will happen, maybe they don't -- are you going to risk that? No, you're not! When you say that these banks are "too big to fail," what that means is in that conversation -- and this goes, of course, to the Oval Office -- the president has to decide. "Do I take the risk? Do I close down these guys who've clearly messed up, clearly behaved irresponsibly? Do I risk a second great depression? Just to make my point? Or do I bail them out?" The big players on Wall Street are very sophisticated, very cynical, very experienced. They know how to play this game! They'll even show up to the president's speech. It's a done deal, as far as they're concerned: next time there will be another bailout.

MMC: We're talking about -- in the last year -- mergers, so we're talking about in some cases banks that are bigger than ever!

SJ: Absolutely. Our biggest banks that were already apparently "too big to fail" have become bigger. They've acquired other banks and other pieces of the finance industry. The concentration of economic power in the banking sector has gone up. And -- get this! -- their political clout on capital hill and more broadly in Washington (where I work part of the week and where I spend a lot of time talking to people and following the nitty-gritty ins-and-outs of this). The political power of finance and of the biggest banks has actually gone up! Washington Post has had a series of articles documenting this in a very impressive way, with a lot of detail, and people like Jamie Diamond for example, who heads JP Morgan-Chase, says: "Oh yes, now we're focusing much more on our Washington strategy. It's absolutely critical to us as a big bank going forward." These guys know how to play the game! They pretty much own the town right now.

MMC: If Congress were to, in some ways, create legislation to make banks smaller, you're saying that the chances of that happening are perhaps nil?

SJ: First of all, the administration is not proposing that. They've never put that forward. Secondly, it's unlikely that Congress would take up such an idea and that it would get through the legislative process. And thirdly, it's rather unlikely that regulators -- if they had some discretion in the matter which they almost certainly would -- would enforce that. But that's the key thing. It's the size of your biggest financial players. So CIT Group, which is a substantial financial institution -- total assets earlier this year when they were in serious trouble -- about $80 billion. Eight zero. They came for a bailout saying, "If you don't help us out, small and medium business in America, to whom we lend, will collapse." Actually the Treasury -- to its credit and credit to the rest of the administration -- turned them down and said, "No, you go sort it out with your creditors." And that's what they've done and have gone through some sort of (what we'd call) bankruptcy process. That was 80. The banks we've had trouble with, the Lehmans, the Bear Stearns, and all those other guys, were $600 billion, $800 billion and up to $2 trillion in total assets. If we could take those $2 trillion banks and break them up, turn them into more banks of below $100 billion in assets, it wouldn't be a panacea but it would definitely help and move us in the right direction.

MMC: You have described the Federal Reserve as the world's greatest bailout machine. Obviously the Federal Reserve can print money and help some of these banks stay in business. But you're saying that because of the power of the Fed, they have created this moral hazard that encourages bad behavior. Describe how that works.

SJ: I think that in order to understand the Fed, the good side and the bad side of the Fed, you need to go back to the founding of the Federal Reserve. It was after the crisis of 1907. A lot of big, powerful bankers got together and said, "We need public money to support the banking system." Senator Aldrich of Rhode Island was the leader of that faction. But there was also pushback from what we might now call "Wilsonian Democrats." Louis Brandeis, was the person who nailed this one -- he wrote a fantastic series of articles that became a book called "Other People's Money And How the Bankers Use It." People like Brandeis said, "No, no. Hold on a minute. Bankers are already too powerful. You can't just give them public money to play with. You have to have sufficient public control over the institution you set up." So the Fed is a compromise [laughs] and sometimes compromised by this relationship between helping the private bankers, particularly when they get into trouble, particularly in a crisis -- and having enough public oversight. Some phases of Fed history -- like from the '40's, '50's, '60's, and '70's -- have actually gone quite well. When finance has been heavily regulated. But prior to 1935, it didn't go that well. We had a massive speculative frenzy in the '20's and then a big crash in the Great Depression. Since 1980, we've actually taken away a lot of the regulation that worked after World War II. We've gone back into this unregulated, deregulated -- "finance can do whatever it wants and the Fed will bail it out later" -- Greenspan philosophy in a nutshell. That is really, really dangerous. So the Fed is a bailout machine. If you combine it with a tightly regulated financial system, we can all live our lives pretty well with innovation and plenty of growth -- that's the post-World War II experience. If you let finance get out of its box and get deregulated, really bad things happen quite quickly. And they happen again and again.

MMC: So when the President called for more regulation, what is your critique?

SJ: Well [laughs], calling for more regulation is what I'm calling for. The question is, what's in the details? If you go through it point by point and dissect what the government is putting on the table, it's very weak. They're not proposing to break up the biggest banks -- nothing in there about that. They're proposing to increase the amount of capital in the banks as a cushion against losses. That's what the shareholders have to lose before everyone turns around, looks at the taxpayer, and says, "Okay, your turn to cough up some money!" The administration, by the way, won't tell you how much they're proposing to increase it. As far as we can ascertain -- those who follow it very closely and talk with people on the inside -- the increase will be very small. One of my colleagues is actually calling it "dinky"! The increase is so small that if it was any smaller you wouldn't be able to see it. If you go back and look at how our financial system operated back when it was deregulated -- back when there was a lot of risk -- it had a total amount of capital, two or three times what we allow our banks to have. What our banks have now made sense if the '50's and '60's when they were tightly regulated. It does not make sense anymore. But the Fed isn't saying that. The President isn't saying that. We're not taking on these big issues.

MMC: There is a call for something called the Consumer Financial Protection Agency that would protect consumers. As an idea, do you support that?

SJ: Absolutely. That is the one piece of the President's agenda that I think is right. I think it's been well-defined. I think it's a sensible proposal. It's with Congress now but the banking lobby is vehemently opposed to this. You can see a lot of the debate by looking at the contrast between how the banks are attacking -- fully, head-on, using all kinds of contributions and various other devices -- to prevent this agency which would protect consumers from coming into being. On the other hand, all these other regulatory proposals the Obama administration has made -- the banking industry has no problem with them. Has never had a problem with them! They were allowed in on the design with the administration. They didn't even particularly object to what the administration first put on the table. It tells you that's not pushing these banks at all significantly in the right direction.

MMC: This gets a little bit into the weeds, but it's important. Some are calling for a merger between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Where do you stand on that idea?

SJ: There's no question that we have too many regulators in the US. A lot of our problems are actually the different distinctions and distance between federal regulators and state regulators -- for example, in insurance. This is a huge issue. So I'm in favor of consolidating these regulators as much as possible. And -- what you talked about -- potentially merging the people who regulate securities and the people who regulate [laughs] ... securities -- of course makes sense! That is incredibly difficult to get through because they report to different committees in Congress. Those committees in Congress do not want to give up that jurisdiction and that authority. That is an incredible uphill slog. I... would like all of the above. That's actually my approach to reform. But you have to make some choices and I would go much more directly after the underlying structures: the size of the big banks, their capital, and (by the way) the revolving door between Washington and Wall Street. It is incredible! You can walk out of a failing or failed Wall Street bank on Friday and on Monday be in charge of the program for bailing out those banks. When the US sees that in other countries, we're very, very critical of that. Yet that's our current situation.

MMC: I heard something recently on NPR. Someone had saved a tape of Bernie Madoff talking, I believe, to some potential investors in his company about the SEC and what to do about regulators. He was bragging about how you can hoodwink them and trick them into not knowing what it is that's going on in your investment company. Do you think he's unusual? Obviously, he sits in prison for this ponzi scheme. Does he represent an anomaly within the financial system or business as usual?

SJ: I think he represents a relatively unsophisticated player, actually. The other big people in finance are much more clever about how they run their schemes. I guess they do share the ability to outfox -- and stay ahead of -- the SEC. But there's a question about how hard the SEC has been trying, particularly in later years. A lot of the regulators, a lot of the people in Washington, really believe that what's good for Wall Street was good for the country. And of course that turns out to be sadly and almost completely wrong.

MMC: We're learning this week that the median income in the country has dropped about $2,000 from the year 2007 and 2008. The median income for a typical American family is close to $50,000. That's not a lot of money to raise a family on.

SJ: Absolutely. The people with a median income have not done well over the past 12 years, obviously. Inequality has got worse. That's not all. I guess it turns out that a lot of what we thought was growth in the early 2000's was not really growth. It was growth at the cost of these massive risks that we'd have to pay for later. Who pays for this? It's people who pay taxes. It's people in the middle of income distribution -- that's a lot of where the income tax burden and the [inaudible] tax burden falls. This is a disastrous outcome for most people in the middle class.

MMC: So is Wall Street just entirely disconnected from the rest of the economy?

SJ: Yes. There are some connections, definitely. I'm not anti-finance. I'm a professor of entrepreneurship at MIT. And I'm very much in favor of being able to raise capital, take risks, and fund non-financial innovation. I think venture capital, for example, is absolutely crucial. It's a big part of how this economy moves forward. But the financial sector, as currently constructed and operating around Wall Street, has become problematic. The costs vastly outweigh the benefits of the way they operate. Most of what they call "financial innovation" is not just not useful to the rest of society, it's extremely dangerous. They've taken these massive risks -- which maybe they understand and maybe they don't. Doesn't matter. When it fails -- and it's designed to fail in an important sense -- they come to the taxpayer and ask for money and it's blackmail, of course, at that stage. Jamie Diamond said this in a speech earlier this year when he said, "Well, you know, you can let us fail, you can vilify us, you can say it's all our fault. But then you'll have an even bigger recession. Your choice! What do you want to do?" And, of course, that's how they get off the hook.

MMC: But are you saying that Wall Street is essentially back to its bad old ways? Before the bailout and the implosion last fall?

SJ: Oh yes, absolutely. I think in some ways we're in worse shape than that. Now I'm not saying that we're going to have another crisis immediately. Back to back, severe financial crises are very rare. Instead, of course, you go through another cycle where people feel good and the major players take on a lot of risk. Of course, they'll have a good run for a while. They'll pay themselves massive bonuses. When there's an upside, they get the upside. When the downside comes -- 2? 3? 5? 7? maybe 12? years down the road -- it's huge. Look back over the last 20 years. think about Alan Greenspan's achievement as governor of the central bank, as chairman of the Federal Reserve in this country. In 2001-2005, people said he's the greatest central banker we've ever had. Now you look back and say, "I don't think so. I think he was actually a disaster." What happened over the past 20 years. He was probably the worst central banker this country has ever experienced.

MMC: What do you say about Ben Bernanke so far?

SJ: [laughs] Ben Bernanke has done a very good job as a fire fighter. Once the financial fire broke out and once the meltdown occurred, he worked really hard to prevent that from spreading and from becoming even more damaging. But of course fire fighters have two jobs, really. One is fighting the fires when they break out. The other is trying to prevent fires, trying to think ahead, trying to design systems and strategies that make fires less likely -- and less damaging when they break out. And on that one, I'm afraid his track record is not so good! When he worked at the Fed under Alan Greenspan, he was absolutely in line with the Greenspan idea that you don't worry about bubbles or financial frenzies when they're building up, you just clean up afterwards. That's what we just done, the last 12 months. You really don't want to do that and you really don't want to do what we've been doing the past 12 months again. More importantly and more relevantly, in terms of what he's saying now about what he's planning to do... you know, he's been giving speeches -- he gave a speech at the Brookings Institution in Washington and he laid out his view of what the problem is and what reform [inaudible] is, and so on. It's all very technocratic, all very hollow-sounding. And it is hollow. He's not confronting or even speaking about the deeper, underlying political realities here and the power of the financial sector and how it's going out of control. Now, not all of that is up to him to fix. But his intellectual leadership of the Fed is absolutely critical, for good or ill. ... [inaudible... note: Johnson speaks very fast, and occasionally words get lost]

MMC: So if you ran the Fed -- perhaps we're hearing what you would do if you ran the Fed! -- what would you do?

SJ: I think that the task that we're facing -- specifically the chairman of the Fed needs to take on the diagnosis and definition of the problem in much more stark terms. And explain to people -- some of which you can do in public, some of which the chairman of the Fed can't say in public but can push for very hard in various private contexts on Capitol Hill, with the administration, and with the industry. You have to push for the true end of this too-big-to-fail syndrome. And having these little technocratic tweaks such as "We'll have a Resolution Authority that will give us the legal power to deal with these banks" (that's what the administration wants to do and what Bernanke's supporting at the moment -- it's just not convincing. Because when these big guys come to you and they're across borders, for example -- CitiGroup is a massive global bank -- and if they were, hypothetically, to come to you and say, "We're about to fail," this Resolution Authority that they're putting all this weight on doesn't deal with cross-border issues. So even on their own, narrowly defined, terms the solution they are seeking does not address the problems they faced last fall. How can this make sense? The Fed has to do things very differently.

MMC: I'm looking at something you wrote at your website, Baseline Scenario.com. In part we've been talking about this. You're saying, "Financial institutions have to be made smaller. They have to have more 'skin in the game.' You have to address the revolving door between Wall Street and Washington." The Fed has to rethink it's ability to be this bailout machine. Is that what you're calling for?

SJ: Yes, absolutely. None of that is stuff the Fed feels comfortable calling for -- the existing Fed chair or Fed structures. And that's kind of the point. We've designed a system in which the guys in charge of the bailout, the guys who really know how the thing went wrong and what you need to do to fix it -- I think they do understand this -- feel constrained. They feel it's not their job to talk about it.... and so on. That's a problem. That's not okay, as far as I'm concerned.

MMC: But it sounds like fixing this revolving door between Wall Street and Washington is the top priority, then?

SJ: I think that's huge, to be honest. I think there's a very clear conflict of interest where people go either from Wall Street to Washington or when they go from a key regulatory position in Washington to Wall Street the next day. Or to an advisory position on Wall Street. I think there should be a five-year moratorium on that. I think people will be shocked, they really don't like that proposal. But I'm afraid we've sunk so low that you have to swing to the other extreme now. You cannot have people going back and forth and people in government thinking, "Aha! I'm going to land very nicely at Goldman Sachs after I'm done with this government gig." Of course that leads to perverse and crazy incentives. And by the way, when you see this kind of thing happening in another country -- when we saw it in Indonesia, for example, in the fall of 1997, when the US Treasury was controlled by Robert Rubin, Larry Summers, and Tim Geithner was also working there -- the US was very hard on Indonesia. Very critical. And directly and through the US position at the IMF, they put a lot of pressure on the Indonesian government which after -- perhaps -- some unintended consequences led to the fall of of President Soeharto.

MMC: Hmm! Have you been asked to testify before Congress? Curious...

SJ: [laughs] Yes, I've testified to quite a few committees of both the House and Senate, and the Joint Economic Committee, over the past nine months or so.

MMC: And the reaction you got, was it kind of like what the president got at Federal Hall with those financial titans sitting in the audience?

SJ: No, no. Actually the response on Capitol Hill is pretty good at the level of "we have a huge problem in our financial system and we should fix it." I think over time it's become more polarized and more partisan -- which to my mind may be actually fairly productive -- with the Democrats saying how we have to regulate properly and more. There's always a range of opinion on the Democratic side. On the Republican side, you have a lot of people saying, "No, no, the problem is regulation. We should deregulate more!" Right? So I'm more in the regulating camp, as you might guess. But that's at the level of testimony, that's at the level of these sessions I'm involved in which are more about the economics and economic incentives and policies going forward. The problem is that when you get into the nitty-gritty of designing legislation that the special interests come into play. It's interesting. I've never been called to testify on a panel, sitting next to a banker for example. I think that would be quite interesting! And, at the height of the crisis and subsequently, various people have tried to arrange debates between me and (say) the American Bankers Association. Or the roundtable that represents big finance. And they don't want to talk in public. They work very effectively in private. They work behind closed doors. They have lots of leverage, I guess! [laughs] And they're very good at blocking in the trenches what otherwise should happen.

MMC: ... We have a call from Vincent from Philadelphia to join our conversation.

Vincent: Just to support what you said, Niall Ferguson, the Harvard and Oxford professor and a good friend of [Professor] Johnson's, I'm sure, points out in a current issue of Newsweek that the 10 largest financial institutions rose from 10% to 50%. In other words, 10 banks control 50% of the financial assets in America today. Boy, if that's not "too big to fail" I don't know what is! But anyway, there was an earth-shaking judicial ruling coming out of Judge Rakoff's office yesterday and it's been all over the financial media. He won't accept Bank America's settlement -- the SEC settlement of $33 million -- which is ridiculous. He's going to have them go to trial and has got Congress swinging into action. I hope Professor Johnson will be invited before the Oversight Committee chairman Edolphus Towns and I hope you [MMC] get Congressman Kucinich on because both of them have just send Mary Shapiro, SEC chairperson, a letter. She's been presiding over that agreement. Professor Johnson is right on target...

SJ: I thought that was a terrific ruling. I don't know if it will stand up under appeal. But what the judge said was absolutely brilliant because there's $30 million or so settlement that the SEC had agreed to. Basically, that's a fine on Bank of America and its shareholders for Bank of America misleading its shareholders. Which is crazy. And the judge said, "This is crazy! I want to see the issue of the responsibility of Bank America executives -- the individuals, the people -- I want to see that on the table. You could presumably do that through a revised settlement or through a trial. I think he's absolutely right. We've got to the point where the people -- individuals running our banks -- are not held responsible for their actions. And that has to stop.

MMC: We have a call from Dale in Kennett Square.

Dale: It was Republican Teddy Roosevelt that made the case that some companies were so big that they were too big to fail and they were a threat to democracy. Having said that, the matter of personal accountability comes in. Why is it okay to kill people in death penalty cases but it's unthinkable to put a business out of business -- have a death penalty for businesses? In Pennsylvania they took the charters away from ten or twelve banks in the 1800's because they did egregrious harm.

MMC: ... Imagine if Lehmann Brothers or, let's say, AIG had been allowed to fail. What do you think the impact would have been?

SJ: At the moment when the government faced that problem last fall -- once you get to that point, allowing these big guys to fail can have potentially catastrophic consequences. That's the point. That's what they designed these structures. That's what give them this blackmail-in-a-crisis power! But I'd like to what the caller said ... two dimensions I thought he had exactly right. Teddy Roosevelt is exactly the right historical parallel here. Teddy Roosevelt stood up to the big financial industry interests of his day. He had a big showdown with J.P. Morgan, for example. Teddy Roosevelt said (and felt very strongly) that the industrial trusts which were finance-backed -- but they manifested more as railroad trusts, for example -- had become too powerful politically. They challenged the executive power of the US. Andrew Jackson had the same showdown in the 1830's, by the way, with the Second Bank of the US. FDR had to face down the securities industry in the 1930's. This is a repeated cycle in American history. As for the caller's point that why don't we have the death penalty for businesses: the US is very, very good at shutting down small and medium-sized banks. The FDIC's resolution and [inaudible] process first class, okay? What we cannot handle is the top ten, thirteen, fifteen banks. That's where we choke right now. That's what has to be fixed. The only way to fix them is to do the Teddy Roosevelt strategy: break 'em up.

MMC: An FDIC for these big banks? Is that what you envision?

SJ: Well, the FDIC for these big banks has been proposed. Some people are kicking that around. ... But if you think in those terms -- FDIC as an insurance arrangement -- they would have to charge, for this to really work, an insurance premium that is appropriate for the risks being taken by these massive banks. Well, you've seen how big the risks are. You seen all the resources -- Federal Reserve resources, taxpayer resources -- that have to be committed when these things fail. A properly priced insurance premium would be prohibitive. The large banks wouldn't be able to exist -- which is fine with me! That'll press them to be broken up. But realistically, they'd just pay a lower premium than they would otherwise. And you'd basically be carrying the existing arrangement which is an implicit form of taxpayer guarantee that ends up being incredibly expensive and doesn't prevent them from taking on these relentless risks that we all come to regret.

MMC: One description I've heard of our system is that you get unfettered capitalism on the way up and socialism on the way down when the government intervenes!

SJ: Some people like to call it "lemon socialism." Meaning, you only get the lemons, you only get the bad stuff! The Wall Street expression is: "Wall Street gets the upside and the taxpayer owns the downside." In a sense what we're seeing here is a repeat of what Wall Street's seen before. But it's happening now on a scale that was never previously imaginable. The financial sector in this country used to be 1-2% of GDP back 50-100 years ago. It was 4-5% of our economy after World War II. Since 1980 it's 8%. 8% of all we produce in this country is financial services and these turn out to be very dangerous.

MMC: I want to talk about executive compensation, something that you and many others have talked about and certainly something that rankles most of the the public. When you look at compensation for financial executives, is it just that they get paid so much or that somehow their pay is not connected the performance of their company?

SJ: Well, the pay is obviously connected to the performance of their company when things go well and when they do great. When things go badly, they don't lose. And this is a big change from, say, the 19th century. In the 19th century when you managed a bank that failed you lost your money -- because most of your wealth was in that back -- and you lost your social position. You were not re-employed in the government or another major bank! Some how we've moved away from that. The culture of executive compensation, very broadly defined, is "make out like a bandit in the boom and when things go wrong, walk way with a golden parachute or a lot of cash." Or maybe you lose the value of shares. But still, you go from being a billionaire to being a multi-millionaire. That is definitely part of the problem here. Executives are not being careful enough because they don't have enough skin in the game.

MMC: How would you get more skin in the game, to use your phrase?

SJ: I think the key is to make their compensation contingent on they're not being a major failure. Of course the trick there is that these failures are not manifested within 12 or 24 months but over a much longer period of time -- 5 or 10 years, for example. So there has to be a lockup and a hold on the wealth that they acquire from these activities for a long period of time. The debate is nowhere near even recognizing that principle. But if it were up to me, I think at least a 10-year hold would be appropriate.

MMC: And give shareholders more control, more say over executive pay?

SJ: That certainly would be constructive. But I would also stress that shareholders need to have more equity, more commitment. The amount of capital that banks had at risk before 1935 was roughly two or three times what they have now. In fact, under the National Banking Act of 1863, if the bank failed you, the shareholder, were liable not just for the money you had in the company and could lose but for another hit equal to the par value of those shares. This was contingent liability or contingent capital that bank shareholders had to put it. As a result and as you can imagine, bank shareholders were a lot more careful about who was managing the bank and what they were doing because they had more money at stake. If you let these banks operate with very thin cushions -- a little bit of equity and lots and lots of debt -- then, if it fails, you the shareholder don't mind that much. If they're a lot more capitalized you're going to be much more careful.

MMC: What about this board compensation committees that come up with these executive salaries?

SJ: Well, it's obviously cooked!

MMC: They're all part of the same club? They literally go to the same clubs and send their kids to the fancy private schools?

SJ: Yes. Rakesh Khurana at Harvard Business School has written a brilliant book and some other pieces on exactly this -- on how you construct this social reality and perspective, sort of cultural capital around boards and compensation. It's a huge problem for shareholders. These financial companies are run primarily for the insiders, primarily for the powerful insiders, and very little for the shareholders. It's a very, very tough problem. We should be working on that, too. While we're working on it, we need to break them up, make them smaller so at least in the meantime they're a little less dangerous.

MMC: You're saying it's a culture where it's not unusual for someone to make millions and millions of dollars so why wouldn't you give an executive some lovely golden parachute?

SJ: Absolutely. The whole thing is priced relative to what other execs are getting. They say, "Well, this guy down the road has got these incredibly generous terms. I should be getting this. Or I should be getting something a bit better." And the boards are not browbeaten. The boards are convinced. They believe. That's very important. A lot of this is about ideology. A lot of it's about shared believes and perspectives. It's a form of cultural capital and cultural capture by these powerful finance insiders. The likes of which you've never seen before in this country or actually anywhere else.

MMC: Jerry is calling from Haddon Heights.

Jerry: We'll have to go back to some of the financial regulations that were repealed. I was wondering if part of the prevention of the "too big to fail" scenario would be some sort of Glass-Steagall type of regulation. When they repealed all that, that's when all this nightmare started and these banks became 'way too big for their britches.

SJ: Jerry is right. The waves of repeal of financial restrictions around the time of Glass-Steagall were absolutely critical here. I would put more emphasis, perhaps, on some other things and particularly the failure to regulate derivatives at the end of the Clinton administration. Glass Steagall, of course, was the measure taken in the 1930's to address the problem in the 1920's that investment banks had become very much like commercial banks and were able to use some of the protections and activities of commercial banks to fund speculative investment activities. I'm not sure that in today's world that distinction has quite the same importance. Remember: the financial sector is innovative, they move one, and they found ways for pure commercial banks to do absolutely crazy things -- like lend subprime mortgages, like get involved 'way over their heads in derivatives -- while that remains commercial banking. And of course the investment banks did lots of crazy things as pure investment banks. They made themselves so big that just as investment banks they threatened the world's financial system and the world's economy. I'm sympathetic to this Glass Steagall line, but I think much more important, much more cutting to the modern chase, is making them smaller and having a lot more equity and reducing the Wall Street/Washington revolving door.

MMC: What would you do about derivatives?

SJ: Derivatives are a very interesting and tricky matter. Some people in the non-financial sector say they want to be able to hedge risks and they can do that with derivatives. But I think the consensus of opinion is putting all derivatives on exchanges and having them be much more regulated, much more transparent. Then of course there's this issue of to what extent you allow the financial firms to have risks which turn out to be hidden risks through their derivative positions. That's where you really have to clamp down. Again, if they're smaller, it doesn't matter as much if they take risks and fail. If you go to Las Vegas and lose all your money on whatever kinds of speculations -- derivatives, roulette, whatever! -- that doesn't matter too much to me. It's your money. It's sad but it doesn't endanger the economy. It's when you're very big and you lose money on wild, speculative gambles -- even if you're gambling on sensible instruments -- that's where we get our huge problem.

MMC: We have Michael from Unionville.

Michael: My question is about the credit rating agencies and what maybe we should have done about regulating them. What basically happened is that they were delivered bags of rotting offal, had their palms crossed with three pieces of silver, and stamped "USDA AAA Prime" on the stuff so it could be sold to the Fisherman's Bank of Norway or something! Seems to me that those rating agencies, where everybody is complicit in particularly the subprime issue -- is anything being done or should be done to control their activities and their methodology of risk assessment?

SJ: It's a great question and a very nice statement of the problem, actually! Very little is being done to arrest the problem of credit rating agencies. Clearly the underlying problem is that they're being paid by the guys underwriting the securities. They should be compensated in another way. They should be compensated by the people who buy securities. There's no agreement on how to do that and I don't think this is going to be where you'll see change. I think the credit rating agencies are a tool, an instrument in the hands of these big financial players. We should address the problem at its core, at the level of how much power the financial players have and how to make them smaller. I'm certainly in favor of finding ways to change the compensation schemes that fund the credit rating agencies and allowing more entry into that business and broadening the set of people who are allowed write ratings could also be helpful in that context.

MMC: We've got Robert now from Jersey City.

Robert: I'm just curious to know if you're familiar with the work of Dougless Rushkoff. He just came out with a book called "Life, Inc." where he talks about the corporate age being the cause of the economic crisis. Basically, this virtual economy which is predicated on the creation of debt not the creation of value which was the original foundation of our economy. I just wanted to know what your thought are on that or his work, if you're familiar with it.

SJ: I must admit I'm not familiar with it but I'll see if I can download it to my Kindle immediately after the show! I think on the point as to whether we've moved away from the creation of value to the creation of debt, that actually sounds right. Within the financial sector. I think it's very important that we have a strong, non-financial sector in this country. We're very good at innovating and creating things. I work at MIT. I'm not an innovator, not an engineer. But I've seen a lot of that over the last twenty-five years. I really appreciate it and have seen how that become companies and new products. On the non-financial side, we're the envy of the world. We have people lined up at the door at MIT wanting to understand that process of non-financial innovation. I think where we've gone wrong is that too many of us have bought into the idea that financial innovation is kind of like non-financial innovation. After all, the word "innovation" is really good, very positive connotation in modern American culture and with good reason. But financial innovation is not just like non-financial innovation. Much of recent (last 20-30 years) modern innovation has come with these hidden risks. And these hidden risks, when they materialize they materialize together and they're a very big hit on the taxpayer. That's very dangerous. It's totally unlike non-financial innovation.

MMC: But I wonder how you create an economy that encourages this kind of non-financial innovation that you just described?

SJ: I think we have. We had an economy that was very good at that in the 1940's through '70's.

MMC: How do you bring it back?

SJ: I think you put finance back in its box, to be honest. We had a highly regulated financial sector in that post-war period. It didn't prevent us from having big breakthroughs in technology. Think personal computers, think telecommunications. Actually, even within banking. The banks invented ATM's. We invented venture capital in and around the financial sector. And credit cards were also invented in that relatively regulated phase. So I just don't buy the idea that you need modern, unfettered, so-called "financial innovation" in order to have growth. It's done very little for us even in the most positive reading. And in my reading, which is not at all positive, it's led us into great and grave danger.

MMC: In fact, I'm looking at the New Republic, the September 23rd issue, and you and Peter Boone co-authored an article. The headline reads, "The Next Financial Crisis: It's coming and we just made it worse." Are we on the cusp of another financial crisis?

SJ: Yes... but let's be careful. Remember, back-to-back crises are not the norm. The norm -- what we've seen in the last 20-30 years in this country and other places where finance gets out of control -- is you have a boom-bust cycle. The boom can last for a while. I think in a year's time you might look back on this conversation and say, "Well, Simon was exaggerating. We haven't had a crisis." I'm not saying we're going to have a crisis in the next twelve months. I'm saying we're building up the same kind of vulnerability that we had in 2003, 2004, 2005. And of course it kept going unti 2007. In fact, a lot of it kept going until 2008, right? And people felt good. People said, "Well... all this is acceptable, all this is fine, and if there's a problem we'll clean up later." And then we have a huge crisis and when you reassess the previous decade -- I'd say the previous two decades of Alan Greenspan's tenure at the Fed -- and you say, "Oh My Goodness! We were just deceiving ourselves. That was illusory. That was ripping off people." A lot of financial people walked off with much cash but the rest of us got absolutely hammered by this experience. So we're on the cusp in that sense.

MMC: It sounds like you're saying, looking at the past, that we're only able to diagnose our problem in hindsight? I ask that because I'm curious, as you look ahead -- and perhaps it is signs of a boom and then of course the bust follows the boom, what you will be looking for to indicate that uh-oh, here we go again!

SJ: I think you look no further than the attitudes and behaviors of the financial sector. As I said at the beginning, the fact that no bank CEO's came to listen to President Obama when he was asking them very politely to please behave better in the future -- with or without regulatory reform -- I think that tells you a lot. I think the financial sector has its swagger back. The swagger is good for them and very bad for the rest of us. That is what we've learned the hard way over the past few years. If you go back and look at the last years and the way the Fed has operated and where the Fed has been a positive force in the American economy and when it's actually not been a positive force but reinforced these cycles, that's what we do in the New Republic article -- I think we say, "We need more financial regulation in a hurry!" If we're going to make an error here, perhaps we should err on the side of too much regulation for a while and put those guys much more in the box where they were in the '40s, '50's, '60's and '70's. And the rest -- the non-financial part -- of our economy based on that evidence and based on what we're seeing now more broadly would do just fine.

MMC: You've mentioned that both Roosevelts -- Teddy and Franklin -- stood up to the banks and the financial system. Are you saying that Obama needs to be tougher? I mean, he used some strong language but that he isn't tough enough with this part of our economy?

SJ: Yes, that's exactly what I'm saying. He should have been tougher on them back in March. He felt, for whatever reason, that was inappropriate. Now the economy is recovering. He should absolutely be tougher on them. He should be pushing them much harder. I think you can see from the fact that they don't even come to his speech that when you don't demonstrate strength -- when you try to accommodate them and try to be nice to them -- you don't get respect from Wall Street. Wall Street is about power. Wall Street is about looking at the odds, assessing the trade, and saying, "Yep. We know where this one is going! Thanks very much, President Obama. We've got this one and we're going to run the next cycle just like we ran the previous one."

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Recent articles from and interviews with Simon Johnson

Atlantic, "The Quiet Coup: How bankers took power, and how they're impeding recovery."

On Point, Roundtable discussion on "Wall St., A Year After the Meltdown"

New Republic, with Peter Boone, "The Next Financial Crisis: It's coming--and we just made it worse."

Interview on NPR's Fresh Air with Max Blumenthal about how the right is trying to de-legitimize the Obama presidency.

Terry Gross: There's the movement of people who claim that Obama isn't even an American citizen and others who accuse him of being "a Hitler" or "a Stalin." In Blumenthal's new book, "Republican Gomorrah: Inside the Movement That Shattered the Party," Blumenthal writes that the Republican party has gone from a "big tent" philosophy to being fully in the grip of its right wing. Blumenthal has been covering the Christian Right for six years, attending dozens of its rallies and conferences, listening to its radio programs, and sitting in movement-0riented houses of worship. In his book, "Republican Gomorrah," he writes about people who created the blueprint for the Christian Right and the people who have funded it. Blumenthal is a senior writer for "The Daily Beast" and has written for "The Nation," and the "Huffington Post."

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TG: Your book ends with the scene of Republican Congressman Paul Brown of Georgia and two of his friends who are very highly placed in the anti-abortion movement praying over a door that Obama was about to walk through to take the Oath of Office. What were they praying about? Set that scene for us.

Max Blumenthal: Paul Brown, a Congressman from Georgia, is a born-again Congressman who said that he was inspired to become an evangelical Christian by the guy who used to hold "John 3:16" signs in sports games, who wore a multi-colored wig, and who's actually in prison now for kidnapping and stink bomb attacks. The image of this character at sports games inspired him to become a born-again Christian. He gave special access to two characters, Paul Mahoney and Rob Schenk, who were involved in "Operation Rescue" during the 1990's. That's the militant wing of the anti-abortion movement which was at least indirectly connected to several assassinations of abortion providers and attacks on abortion clinics. Most recently, the assassination of Dr. George Tiller in Kansas. What they were doing there in the Capitol was they were planning to anoint the door that Obama would walk through as he prepared to give his inaugural address with oiled crosses. The reason I described this scene and thought it was important was that it was emblematic of where the movement was going to go. They were "consecrating" their planned opposition to the Obama administration at a time when the media and probably the Obama administration believed that they had the good will of even elements that had opposed Bill Clinton in the 1990's, and that this was a new, post-partisan era. I think this anointing of the door was symbolic of what was to come. I think it's bearing out right now in the health care debate.

TG: One of the things Paul Brown has done is to compare Obama to Hitler and Stalin. He said on his website that he's concerned Obama has a vision that's "fundamentally different from the system of limited federal government that our founders established" and that he "will attempt to destroy the free enterprise, free market, economic system which has made us the wealthiest nation in the history of the world." We're hearing a lot about comparisons between Obama and Hitler and Stalin lately. What do you think is behind that?

MB: Well, Paul Brown was referring to Obama's plan to implement a civilian force that could help during natural disasters. George W. Bush actually introduced this plan and Paul Brown and his Republican allies said nothing. But the grass roots right is determined to de-legitimize President Obama, to prove that he was not born here, that he's "not one of us" or that he has totalitarian intentions. So Paul Brown has compared Obama simultaneously to Hitler and Stalin, two leaders opposed to each other. Seems like a bizarre comparison, but if you tune into rightwing radio, especially fringe rightwing radio hosts like Alex Jones, you're going to hear the warnings that Barack Obama plans to create concentration camps for rightwing dissidents, that he's going to implement mass gun seizures. This fear is designed to mobilize opposition at grass roots level -- to Barack Obama, to the Democratic Congress, and to the Progressive agenda in general in order to win more followers to the Republican grass roots and to the right wing, and to raise funds. It's working. During the Bush years, the rightwing groups lost a lot of money because they function better throwing stones from the outside than they do calling shots from the inside. Now their coffers are filling up so a lot of the rhetoric is designed just to ramp up the debate and to mobilize forces and elements that have been dormant for eight years because the Republicans have been in power.

TG: You describe someone named Anton Chaitkin as launching the opening volley of a campaign designed to link Obama and his health care proposal to the mass euthanasia of Hitler. Who was Anton Chaitkin and what was his role in launching that opening volley?

MB: Anton Chaitkin described himself as a historian without disclosing his affiliation with the political empire of extremist cult leader, Lyndon LaRouche. He publicly accused Ezekiel Emanuel, who is the chief bioethicist at the National Institute of Health and the brother of presidential chief of staff, Rahm Emanuel, of creating a plan for Hitlerian death panels based on Hitler's T4 program. He did this well before anyone in the conservative right -- within the Republican party -- suggested that Barack Obama had a Hitlerian agenda in his health care proposals. The LaRouche movement began distributing leaflets throughout the town halls of Obama with a Hitler mustache painted on his face. Interestingly, rightwing groups adopted this rhetoric. I can't say they adopted it directly through Lyndon LaRouche, but I was unable to detect any other sign of this rhetoric anywhere else before Anton Chaitkin pinpointed Ezekiel Emanuel as the point-man for Obama's Hitlerian agenda. Subsequently, we've seen mainstream Republican leaders echoing LaRouche rhetoric. For instance, Sarah Palin accused Obama of planning to implement "death panels" based on the advice of Ezekiel Emanuel. Charles Grassley, the senior senator from Iowa who is in charge of negotiating Barack Obama's health care reform proposals for the Republican side, said that there may be some reason to worry that this plan will include some kind of mechanism for pulling the plug on grandma. So you can see mainstream Republicans echoing the rhetoric of an extremist movement that many people thought had disappeared years ago.

TG: What is Anton Chaitkin's connection to the LaRouche movement?

MB: He's a LaRouche staffer for "Executive Intelligence Review" which is the bulletin of the LaRouche organization.

TG: Do you see a connection between Christian Right and the claims that Obama bears resemblance to Hitler and Stalin -- that he's leading us in the direction of fascism? This is different from the kind of anti-Democratic rhetoric we're used to which is more about "family values" and culture wars and abortion. This is Hitler-Stalin-fascism/communism! Do you think that's connected to the Christian Right? Where do they come in on that?

MB: I think it's ironic that they would level this rhetoric about someone who's sort of a centrist, consensus-building figure when one of the movement's great inspirations, R. J. Rushdoony, advocated replacing the US Constitution and secular government with a totalitarian theocracy in which disobedient children, adulterers, witches, abortion doctors, women who receive abortions, etc., would all be executed. Rushdoony's son-in-law, Gary North, who's a former staffer for Ron Paul the Republican Libertarian and who is an economist, advised stoning these evil doers to death because "stones are less expensive." The Christian Right, during the 1980's, advocated putting people with AIDS, particularly homosexuals, in quarantine in camps. They're on the record saying this. Mike Huckabee, who campaigned for president in 2008, was among those who advocated quaranting AIDS patients, and he's refused to recant his advocacy for this sort of policy. So I think it's ironic that a movement that has authoritarian if not totalitarian tendencies along with this paradoxical anti-government strain would level these accusation at one of their opponents.

TG: The Southern Poverty Law Center released a report about how anti-government rhetoric is spilling over into the mainstream. As examples they mention some politicians, including Texas governor Rick Perry, Fox Business Network anchor, Cody Willard, whom the report quotes as saying,"Guys, when are we gonna wake up and start fighting the fascism that seems to be permeating this country!" Glenn Beck's example is, "If this country starts to spiral out of control, Mexico melts down or whatever -- if it really starts to spiral out of control, Americans just won't stand for it! There will be parts of the country that will rise up!" I know that as part of the research for your new book you were listening to mainstream media and you were listening to more fringy media -- talk shows of all sorts. Do you agree with the conclusions of this report, that a lot of anti-government rhetoric is spilling over into the mainstream?

MB: I would simply say that the Republican party over the last twenty years has been subsumed by extreme elements, mainly by the Christian Right. The Republican party at the same time has been the most dominant party over the last thirty years. So naturally the extreme rhetoric of the rightwing fringe is going to become mainstream if the major opposition party to the Democrats, who now control Congress and the White House, are echoing it and Fox News is providing a megaphone for it. So this is no surprise at all. What also needs to be noted is that many of the radio shows that are projecting this information and broadcasting these conspiracy theories about concentration camps for rightwing dissidents, mass gun seizures, death panels, are some of the most popular radio shows in the country. James Dobson of "Focus on the Family" is one of the top five radio hosts in the country. So is Michael Savage who accused Obama of trying to indoctrinate an "Obama youth corps" with his speech encouraging public school students to study hard and stay in school. Same with Sean Hannity. So all of the people who are introducing these conspiratorial theories about Barack Obama, suggesting that he's either Hitler or Stalin (or both!) command enormous audiences and are therefore taken seriously by the mainstream media which attempts this veneer of "balance" and entertaining both sides when one side is completely hysterical, conspiratorial and is leveling baseless attacks. Should it be taken seriously? What are the consequences of taking those attacks seriously in a democracy? I think those are questions that need to be raised.

TG: You went to a couple of gun shows in Reno, Nevada, and in Antioch, California. You write that you came away with "a portrait of a heavily armed, tightly-organized movement, incited by rightwing radio to a fevered pitched resentment of Obama and his allies in Congress." The Southern Poverty Law Center recently released a report that the militia movement, which had strengthened during the Clinton years organizing against the federal government, faded out in this decade with Republicans in power. But it's on the rise again. The militia movement is on the rise again. Did you see evidence of that at the gun shows that you attended?

MB: Absolutely. I think there is a perception, especially within the media, that Barack Obama could avoid inciting the kind of opposition that President Clinton did by implementing a moderate to liberal agenda. What I was able to witness at these gun shows -- earlier in the year, before the battle was brewing over health care and the government bailout -- was an incipient extreme opposition to Barack Obama building within the Republican grass roots and on the far right. It stemmed from conspiracy theories spread by radio hosts who are not very well known in the mainstream but who are extremely popular -- like Alex Jones -- that President Obama had a plan to put rightwing dissidents in concentration camps under the federal emergency management agency -- FEMA. When I spoke to people at gun shows, this conspiracy theory was really popular. The same with Obama's supposed plan for mass gun seizures. So people were buying as many guns as they could, including high power weaponry like 50-calibre semi-automatic rifles which have been shown to be able to down aircraft. Sniper rifles that can be easily disassembled and put into a briefcase that's concealable. I showed this in a video I did called "Gun Show Nation." The crowd you see at gun shows -- some people are just basic, apolitical gun enthusiasts. But it's a very political gathering. There are confederate flags. There are even Nazi flags being displayed throughout the conference. It brings in elements that are even considered extreme within the right wing grass roots, like neo-Nazis. Gun shows have become gathering place for people who are the most extreme opponents of Barack Obama's agenda and they're energized again by the battle over health care. We're seeing it across the board. It's not just the extreme militia-oriented elements. We're seeing it within the Christian Right. A recent poll showed that 7 out of 10 white evangelicals are extremely opposed to Barack Obama's proposed health care reforms. The Christian Right is raising a lot of money organizing against health care. It's across the board. The right is growing again. Those who pronounce the death of conservatism or the death of the Christian Right were premature.

TG: You say that at these gun shows -- in addition to conspiracy theories that Obama will put people who opposed him in concentration camps which would be another Hitler comparison -- there's also a lot of people who say Obama will usher in a Marxist dictatorship.

MB: There are. There are also a lot of people -- perhaps the majority of people I spoke to -- who didn't really seem to know the difference between fascism and communism. The goal is to paint Obama as a totalitarian, secret communist-fascist-terrorist-Muslim! Whatever they can do. A basic pastiche of rightwing hobgoblins, a multi-colored piñata of every "evil doer" they want to smash in order to delegitimize him and mobilize as much opposition as possible. As I discuss in my book, this began during the rallies after Sarah Palin was nominated as vice president. It began when Sarah Palin said (I'm slightly paraphrasing it): "Barack Obama is not one of us. His America is not our America. He's palling around with terrorists." At that point, we began to hear cries from the crowd that Barack Obama is a "traitor," that he is "treasonous," and so on. The campaign didn't end with Barack Obama's inauguration. Those rallies didn't end. They've extended into the health care debate, into the debate over the government bail-out, and into every element of Barack Obama's agenda. The more time that goes on, the more extreme the rhetoric becomes and the more diffuse the opposition to Barack Obama becomes. So it's not led by Sarah Palin or any conservative leader anymore. It's hard to pinpoint where the opposition is coming from -- from diffuse rightwing elements that are mostly within the Republican grass roots. It's spreading and it's growing more and more extreme -- to the point where Barack Obama is compared to Hitler, the "most evil man in history."

TG: One of the things your book does is give portraits of a lot of the people who helped create the right as we know it now. But along with people you profile in the book are people and groups whose names won't be familiar to most Americans. They are people who operate largely behind the scenes, who are known to insiders but not to outsiders. Let's do a bit of a Who's Who of the people you write about in your recent history of the right. Let's start with R. J. Rushdoony. I guess you would describe him as one of the founders of the extreme end of the Christian Right as we know it today.

MB: I would describe him as the man who gave the Christian Right its theocratic blueprint for the society and government it hoped to create in the US at a time when the movement was moving from the pews into the streets and becoming increasingly radicalized by federal government attempts to integrate public schools and even so-called "private Christian schools." R. J. Rushdoony was a survivor of the Armenian genocide who came to this country and became a theologian. He's the descendent of six generations of high priests. He laid out of a plan in several tomes for replacing the federal, secular, government with totalitarian theocracy in which functions like road building, medical care, and schooling would be provided by the church. The criminal justice system would be turned over to the church and run according to Leviticus case law. So disobedient children, adulterers, lose women, etc., would all be executed. And of course many of the people he influenced didn't take it as literally as Rushdoony did but he, as I said, provided the Christian Right with a blueprint for the society they hoped to create.

TG: Where do you most see R. J. Rushdoony's influence in the far right today?

MB: Most of the leaders of the Christian Right would deny that Rushdoony has any influence at all on them because of the controversial, radical nature of his work. However, Marvin Olasky -- who helped to inspire George W. Bush's faith-based initiative -- has footnoted and cited Rushdoony in some of his early work. You see some of Rushdoony's ideas reflected in the faith-based initiative which has replaced government social services with services performed by the church and funded groups -- including abstinence-only groups -- with taxpayer money. So Rushdoony has at least loosely inspired that initiative which continues into the Obama administration. I also see it in initiatives funded by one of Rushdoony's acolytes, his financial angel whom I write about in my book, Howard F. Amundson, Jr, who is the son of the famous philanthropist, Howard Amundson, from Southern California. At age eighteen, Howard F. Amundson, Jr., inherited $300,000,000 after his father died. His mother died soon after. He literally went crazy, spending two years in a mental institution. When he came out of the mental institution he became a born-again Christian. He encountered Rushdoony who became practically his surrogate father. In return, Amundson funded Rushdoony's political empire. Then he funded some very successful Christian Right initiatives. For example, the "intelligent design" movement. Howard F. Amundson, Jr., has donated at least $2.8 million to the Discovery Institute in Seattle which created the "intelligent design" curriculum. Howard F. Amundson, Jr., donated $1 million to Prop 8, the successful ballot initiative in California in 2008 to ban same-sex marriage. In 1985, Howard F. Amundson, Jr., said: "My goal is the total integration of biblical law into our everyday lives." And whether or not he's an avowed follower of Rushdoony anymore, I think that remains the goal of all these initiatives that he's funding. They remain successful even though some pundits are pronouncing the death of the Christian Right.

TG: What's another group or funder on the far right that you've been following that you think is important and powerful but unknown to most people?

MB: Well, I wouldn't call this individual "unknown." He's an important person in American life and history. I'm referring to James Dobson who's commonly (and wrongly) referred to by some pundits as "Reverend" James Dobson. In fact, he's not a religious leader. He's not theologian. He has no religious credentials even though he's the most influential leader of a religious movement, the Christian Right, and also the most popular. He's a child psychiatrist! James Dobson understands that behind the right's politics of resentment is a culture of personal crisis that he's been catering to and cultivating since he became a public figure in the early '70's. What Dobson does, and where he strength comes from is the correspondence department in his organization, "Focus on the Family," based in Colorado Springs. It rakes in about $150 million every year. The correspondence department there handles so many letters and so many phone calls that they have their own zip code in Colorado Springs. Letters basically are from people pleading for advice on basic problems from their child's bedwetting to marital strife. They will receive in short order Dobson-approved advice. But then their personal information is entered into a database and they're bombarded with political mailings telling them that the sources of these problems -- the source of social decay -- is liberalism, the homosexual "agenda," feminism, etc. Dobson's radio show, which is one of the top five radio shows in the country, operates the same way. So what Dobson has done and why he's a central character in my book is he has helped cultivate the sensibility of the movement that controls the Republican party. And with these people who view him not just as a political leader or religious leader but as a magic helper who's helped save them from personal problems. They will do whatever he commands at election time. He's been able to set his shock troops against Republican moderates and against vulnerable Democrats. He was credited for helping to reelect Bush in 2004. I credit him as a major reason why Sarah Palin was named vice presidential nominee of John McCain in 2008. It has a lot to do with the fact that James Dobson said on his radio show that he would not vote for John McCain unless he named a suitable vice presidential candidate.

TG: ... Which would be Sarah Palin.

MB: Which would be Sarah Palin. When Sarah Palin was named, Dobson gave McCain his full-throated endorsement and began promoting Sarah Palin to the Republican grass roots.

TG: Tell us about Tony Perkins.

MB: Tony Perkins comes from Louisiana. He was a state legislator there who wanted to become a senator. He wanted to be in the position David Vitter is in right now. Because of a scandal in which he signed a check when he was chief of staff for another senatorial candidate paying the Ku Klux Klan member, David Duke, for his mailing list, Tony Perkins was unable to make good on his ambitions. Tony Perkins, as I reported, also spoke to a white supremacist group, the Council of Conservative Citizens, in 2001 and has refused to disclose what he said there. So he went to Washington and was sort of tapped by Dobson to lead the Family Research Council after Dobson fell out of favor with his previous lobbyist, Gary Bauer. Perkins has emerged as a figure even probably more influential than David Vitter, the person he could have been had he made it into the Senate. He's able to dictate the Christian Right agenda to Republican senators who depend on the Christian Right grass roots to get reelected. He's incredibly involved in the town hall disruptions that we're seeing across the country. The Family Research Council posts weekly conference calls with hundreds of pastors across the country who are telling their congregations to go out to these town halls to create disruptions and to voice their discontent with Barack Obama's health care proposals. Perkins has also helped to introduce the rumor that Barack Obama's health care proposals contains a mandate for citizens to fund abortion. They're running commercials -- the Family Research Council -- making this claim and raising lots of money among their followers to broadcast these commercials throughout the country.

TG: You have managed to get into places and report on meetings where the press is not welcome. One example of that was about a year ago when you went to the church Sarah Palin had been baptized in, the Wasilla Assembly of God, a Pentecostal church in Alaska. She spent over twenty years there as a member. You were there on one of the days Bishop Thomas Muthee of Kenya was there. He's somebody who claimed to be able to expel witchcraft from deep within people -- exorcisms, I guess! Would you give us a sense of what it was like to be there when Bishop Muthee was there. Was Sarah Palin there that day too?

MG: Sarah Palin was campaigning that day and Bishop Muthee, the self-proclaimed "witch-hunter" from Kenya who had anointed Sarah Palin in 2005 when she was running for governor against the spirit of witchcraft, was there. It was a small house in Wasilla. It was pouring rain outside. I stumbled in and the entire congregation was speaking in tongues. I had heard from other reporters that no media would be allowed, that taking notes was forbidden, that filming was strictly forbidden. So I began speaking in tongues. I'd never done it before so I just started rattling off the names of the Jackson siblings! I insinuated myself into the congregation and watched Bishop Muthee as he referred to Sarah Palin as "the biblical Queen Esther" and then began leading the crowd in really intense prayer to cast out the spirit of witch-craft. Then another pastor came up, took the microphone, and declared that we would put our feet against the heads of the enemy and crush the python spirit by stepping on the enemy's neck. It was an instructive event to attend in terms of the theology that animated the congregation that Sarah Palin and her family had belonged to for twenty years and baptized into.

TG: Were you discovered there as actually being a reporter and not a true believer?

MB: Well, I couldn't resist pulling out a small digital camera and so I was sort of discovered. But afterwards I pulled out another digital camera and concealed it much better and was able to show some of the episodes I just described in a video that I have online called "In the Land of Queen Esther" along with some interviews I conducted around the Wasilla and Anchorage area, but especially in Wasilla which is considered the bible belt of Alaska, with people who consider Sarah Palin to be a biblical figure -- or at least biblically-inspired figure -- and who believe that Alaska, because it's shaped like a crown, was called upon by god to lead the nation and would be a refuge in the end times for everyone from the lower forty-eight who had escaped the rapture.

TG: The church meeting that you went to is just one where you've used a hidden camera. Are you 100% comfortable with going in under false pretenses and using a hidden camera to document what you see?

MB: That would be the only time I've used a hidden camera. Generally, I think I've never entered an event under false pretenses or concealed my identity. Which is why I get kicked out of so many places! Including violently as I was tossed out of the College Republican national convention in 2007 -- physically because of my disclosure that I was basically a member of the "liberal media." So it's always a risk. But I think it's best to be above board. The only reason I concealed my camera at Sarah Palin's church was that there was no other means of capturing what was going on.

TG: Your book, "Republican Gomorrah," is in part motivated by words written by Republican president Dwight Eisenhower. Would you leave us with some of what he said that, in part, inspired you to write this book?

MB: While I was writing my book, I discovered a letter from Dwight Eisenhower to a dying veteran of World War II. He had terminal cancer. The veteran, Robert Biggs, wrote to Eisenhower that he felt from his recent speeches a little hedging and a little uncertainty and that he waited for someone "to speak for us and we'll back him completely if the statement is made in truth." It seemed to me -- and to Eisenhower -- that Biggs was sort of suggesting that he would prefer a more authoritarian leader, at least a more heavy-handed leader. Someone more like George W. Bush. Eisenhower decided to respond to Biggs when he could have just tossed the letter in the trash can or issues a canned response. Eisenhower's response was, I think, really remarkable and somewhat eerie. At the time he was under attack from the radical right of his day, the John Birch Society, which had named him and many of his Cabinet members communist agents. Joseph McCarthy. He wanted to guard his Republican party and it's "big tent" philosophy against its right flank. So Eisenhower responded with his vision of the open society, remarking that the unity Biggs was asking for was only logical in a military organization. In a democracy, debate is the breath of life. Eisenhower bemoaned the fact that there are people who had experienced mental stress and burden, who viewed this form of government -- democracy -- as possibly dispensable because it places too much pressure on them. He recommended a book called "True Believer" by Eric Hoffer, a really interesting figure who was a self-educated philosopher and dock worker. The central thesis of Hoffer's book -- which is an analysis of the mentality of the true believer -- is that faith in a holy cause is really a substitute for lost faith in ourselves. This book was passed down through the Eisenhower family and helped inform Eisenhower as he warned against the rise of the radical right and its influence on the Republican party. I included this letter in my book because my book shows the Republican party ignoring Eisenhower's warning and realizing his worst fears.

Steve Roberts interviews Scott Rosenberg, co-founder of Salon.com and author of a new book, "Say Everything: How Blogging Began, What It's Becoming, and Why It Matters."

Steve Roberts: Scott, define blogging!

Scott Rosenberg: A blog is really just a personal website, usually organized with the newest stuff on top and usually with a lot of links. So it has these traits. But it's not like a checklist you have to check off. At this point I think we recognize it when we see it: it's a website that one person (typically) defines and usually with a passion for a particular subject.

Roberts: But this notion of "interactivity" -- of having people comment -- seems to me to be right at the core of what makes this format different from almost any other form we've had in media history.

Rosenberg: Absolutely. But what's interesting is that some of the earliest bloggers still don't have comments on their blog. Their attitude is yes, interactivity is central to what they do, but the interactivity is something that happens among and between blogs. So simply by linking to one another, they're having that conversation.

Roberts: As opposed to allowing for comments at the bottom, which is a very familiar...

Rosenberg: ... comments are a wide-spread standard...

Roberts: ... More and more common?

Rosenberg: Pretty standard.

Roberts: You also mentioned the linking and this seems to be one of the dimensions people outside this world don't fully understand. This is really the currency for a lot of bloggers: how often you're linked to and how you're connected through out this entirely universe in this sort of horizontal system of communication.

Rosenberg: Definitely. A link is sort of a social gesture in blogging, as well as an informational tool. It's the way when you write something on a blog that you support what you're saying. You provide the evidence. People often talk about, "Well, how can I know who I can trust in a blog?" It's an important question. One way you can know is does the person writing it link to sources? You can't do that in print. In print, you have to quote the sources and we have lots of ways of doing that but on the web all you have to do is link and let your readers say, "Are you quoting accurately? Is there any support for what you're saying?"

Roberts: And also links are used -- you say it's a gesture -- as a gesture of approval. "You want to read more? Here's an interesting argument..." It's part of the conversation, this process of going from link to link to link."

Rosenberg: Definitely. It is often used that way. It's also interesting in the part we often overlook: people link to people they disagree with. They're arguing with them. This is something we forget. We hear about bloggers only creating these echo chambers where they're just repeating one another's points of view, or they're recycling a perspective that the reader already has. That absolutely happens. But there's also this element where people will link to stuff they disagree with because they're arguing with it. I think of growing up as a liberal in the '70's and '80's where I would never pick up a copy of the National Review on the newsstand. But when the web came along, somebody might link to an article in there or to a conservative blogger's post. I'll click on the link because I'm curious and want to test my own point of view. I will actually be exposed to more people I disagree with through these links than I might have before.

Roberts: And it's very accessible. You don't have to go to the library to find the National Review or borrow some conservative friend's copy!

Rosenberg: And you don't have to spend money on it which is another whole aspect!....

Roberts: Talk about the evolution of the blog. You write in your book that there's a big debate -- unsolvable -- about who's the first blogger. But you do have a sense of how this phenomenon evolved.

Rosenberg: We have to cast our minds back to ancient times -- to the mid-1990's! Blogging has actually been around under that name for ten years and, really, in some recognizable form for about fifteen years. And you have to remember that in the earliest days of the web, it was a medium full of scholarly papers, research, academic information.

Rosenberg: ... Exactly. It was designed for that purpose. At a pretty critical, early point in its development there was a college student I write about -- Justin Hall. It was in January 1994 when the first article were written about the web by the mainstream media. Justin learned how to build a website, took a look at the web -- which he'd been introduced to by a friend -- and said, "You know, I know how to build a website. I don't have to have it be academic research. I can have it be all about Me!

[laughter]

Rosenberg: And he did it! And he found people were interested in what he was writing. He was a 19-year-0ld. He had a lot to say about himself, as 19-year-olds often do. The site became popular. The other thing he did was fill it with links to other websites. At the time, the web was sort of in a Big Bang phase. It was very early. There were lots of new sites coming online. And when new sites came online, he would link to them. Right there you really have these two foundations for what we now recognize as blogging -- autobiography and linking. He put these together and established a norm on the web that hadn't existed before which was that a website could be a mirror of yourself. That was really the first key element in the development of blogging. The second important factor was the development of tools that made it easy for lots of people to do what Justin Hall had done. The software developers came on the scene and said, "It's too hard to do this. Let's find ways to make it easier." It took years, but over time -- by the early part of this decade -- it became something that you didn't need any expertise for, you didn't need to know any code, you didn't have to spend any money. You could go to a website...

Roberts: ... and download this open source software...

Rosenberg: ... And eventually not need to download. Just sign up on a website as you do today and there you were, publishing to potentially anyone around the world.

Roberts: Give me a sense of the scope here. I know the numbers are hard to define, but Technorati, a popular site that tracks these things says there are over a million posts a day.

Rosenberg: That's right. So the best number we have -- and it comes with lots of asterisks -- is 133,000,000 blogs world-wide as of, roughly, a little less than a year ago. Of that number some huge fraction -- perhaps more than 50% -- are no longer active. So right there you have to scale the number way back. But wherever you land, that's tens of millions of people still actively blogging today. That's an extraordinary number.

Roberts: One of the points you make in your book, Scott, is that people know about segments of the blogging world. They might know about the political blogs. They might know about something called "mommy blogs." There's a movie that just came out with perhaps first the first blogger-heroine -- "Julia and Julie." Give us a sense of the range here. Because it's virtually infinite.

Rosenberg: Yes, it is. Once you get a phenomenon on this scale, it reflects the diversity of humanity. It's sort of a mirror of our interests and our passions. And so you have everything from people at one end who are just writing about the events in their daily lives for a small group of readers -- they don't expect a lot of readers and they're not hoping to become a media star, they're simply saying, "Here's an easy, simple tool..."

Roberts: ... Although probably after people watch the movie and saw that Julie Powell became this media star... you know, "Maybe Amy Adams will play me in the movies..."

Rosenberg: So she started her blog at Salon in a program I managed. Starting in 2002, we let everyone come and blog at salon.com and within a month of the launch of that program she was there, cooking her way through Julia Child's cookbook. We linked to it. It started to get some interest. Eventually she got a book deal and now it's a movie ... So that has happened. And there's always a possibility... But the likelihood of that happening to an individual blogger is sort of like winning the lottery. It's not going to happen ...

Roberts: And most people aren't in it for that reason.

Rosenberg: Exactly. So from that end of the spectrum you move forward to people who are using blogs to augment their livelihood in some way. If they're in a particular field, whether it's real estate or marketing or technology -- you name it -- they want to establish a little authority. They want to build a little attention for themselves on the web. They'll start blogging because it's an effective tool for doing that.

Roberts: And what about some bloggers -- there's been a big article about this in the Wall Street Journal recently, a contentious article by Mark Penn, the demographer and pollster. He was saying there are actually now people who make money just from blogging.

Rosenberg: And there are. His numbers were rather inflated and needed to be knocked down a few pegs. But there are people who are able to make money with advertising on their blogs. Again, the numbers are going to be less rewarding than you will be led to believe. It's not a significant source of income for most people. What it is is a way for you to hang out your shingle, for you to tell the world, "Hey, I know this subject! If you want to know about this field of crafts or something, you can get it here."

Roberts: ... One of the important dimensions of the new media is its relationship to the old media.I teach a course at George Washington on this very subject and I thought one of the paradigm moments was this incident, several years ago, when Dan Rather goes on "60 Minutes" and does a report on George Bush's experiences in the National Guard. Within minutes, various bloggers are correcting this report. In the end, after a couple of weeks of denial, CBS had to say, "They were right. We were wrong. We can't stand behind this." Talk about that incident and what it signified in terms of the relationship of the new media and the old media.

Rosenberg: There's a long tug of war that's been taking place between these two forms of news delivery. One crucial difference that people tend to overlook is that on the web, when you make a mistake, you can correct it easily. You simply publish and update and you can actually change the original report. In the print and broadcast world, it's much harder to correct something once it's out there. So in print and broadcast we have these traditions that are very formal about how you correct something. There's also a kind of reflex that often kicks in -- a kind of circle the wagons attitude where when an error gets reported, people get their backs up. There's that old proudly stated refrain: "We stand by our story!" What happened in the Rather case was that the reflex and refrain kicked in very quickly for CBS. And, in fact, they were either wrong or they simply hadn't done the proper work to verify the reports they'd presented. This occurred in a very politically charged moment. It was the middle of the election in 2004 and and a lot of ideological rancor. People on the right really believed Dan Rather was a lefty and they had their guns at the ready. And CBS gave them the opportunity to open fire.

Roberts: But it seemed to me that this was a perfect example of an argument that people have made in favor of the blogosphere -- that you had the wisdom of the crowd, you had all of these people who had expertise on the typefaces of typewriters and military terminology...

Rosenberg: ... absolutely!

Roberts: ... and CBS didn't understand what was happening.

Rosenberg: They didn't at all. At that point when that story was unfolding in 2004, I'd been publishing on the web for ten years. I'd spent ten years before that at the San Francisco Examiner, the newspaper. I had sort of gone through this process personally -- of understanding that the web was different and that this world had changed. Really, you have no choice today but to be more open and more receptive to the kinds of feedback that you're inevitably going to get from the public. I think for CBS it was a rude awakening. It was a moment that really showed in vivid and painful relief how much had changed.

Roberts: Another moment I think shows how much it has changed, again, from the positive side, Talking Points Memo, a major blog now, run by Josh Marshall, a person you profile in your book and who is one of the real pioneers here -- they won a major award, the Polk Award for their investigative reporting. There was a story about what had been happening to the US attorneys around the country. This was a story that was happening in different places. Because Marshall could tap into his network around the country, he was able to see a pattern that, say, a journalist sitting in Washington did not see. And it seemed to me another good example of the advantage of tapping into the blogosphere as a source of information.

Rosenberg: That's right -- absolutely. The other thing that's fascinating about that story and the way Talking Points Memo and Josh Marshall operated was the sort of unfolding in real time of the character of the reporting. Where a reporter at a newspaper would spend days and weeks gathering information and then, at the end, after it's been carefully reviewed, pushing it out into the newspaper, a blog lets you deal with the story as it unfolds. It lets you sort of a little bit -- "hey, I've got this lead, I've got this information, I'm checking it out"! -- Josh Marshall happens to have a pretty knowledgeable and in-touch group of readers so he can actually say, "Help me out! What do you know about this?" He gradually builds a story. If you make a mistake or go down a blind alley, you say that, too. You admit it: "That one didn't pan out" or "We were wrong" or "Let's try something else." That's a whole style and approach that wasn't possible before we had this form -- the blog -- that allows it.

Roberts: Although I must say, as a creature of the old media (I'd be the first to admit that I spent the first 25 years at the New York Times, that's where I got my training and my perspective, and while I appreciate what you're saying and teach this in courses), one of the phrases that always brings me up short comes from Jeff Jarvis, a major figure in the blogosphere, who says, "We publish first, edit later." There's something inherently grating to me about that! What is the downside of that? You say that the web can be self-correcting and I think that's absolutely true. But it can also lend itself to a lot of mistakes, a lot of rumors. The whole recent spate of stories about the "death panels" is an example of a rumor that just makes its way through the blogosphere.

Rosenberg: Certainly. And I think "we publish first and edit later" is kind of an oversimplification -- a shorthand... I think Jeff Jarvis, for instance, like most bloggers, edits his own posts before they're published. You write and you read. And then, if you really get out of line in some way, your readers will tell you. There's an editing that actually happens that way. The larger your platform is, the more careful you're going to be as a blogger. I think you'll find that there is editorial intelligence at work in all the best blogs. The difference, though, is that the misinformation problem is not, I believe, limited to the blogosphere. The "death panel" story became a story because it got picked up and amplified by cable news and it was promoted by public figures -- politicians -- who injected it repeatedly into the news cycle. If it were simply something happening in the wilds of the blogosphere, I don't think it would ever have caught on.

Roberts: There's no doubt that there's a very complex interaction at work. You mention the advent of more editorial processes in the blog, the more quality blog. Your old colleague at Salon magazine, Michael Kinsley...

Roberts: Okay, but a companion online magazine... He made the point recently and said, "Look, in the early days of online publishing in the blogosphere, we were such outlanders that we could almost afford to be irresponsible. But we've become so much more important that there has to be more editorial control. There has to be more sense of accuracy and more sense of ethics. Do you agree with that?

Rosenberg: I don't think there's ever an excuse for irresponsibility. I think we have to think differently about reputation and trust. If you're talking about a blog network or a company of professional bloggers who are trying to create media institutions, then the editorial values of of the old media still apply. If you want people to trust you, you're probably going to have some editorial safeguards. The publishing cycle may be faster ...

Rosenberg: Yes. The editorial cycle may be faster, things may be a little more informal, but still things are going to look relatively like they used to look. The difference is that there are millions of bloggers today who are not in that world at all. They're doing it personally. They're doing it in an amateur way. For them, reputation isn't an institutional by-product. It doesn't come because you're affiliated with the New York Times or the Huffington Post or wherever. It comes based on your record and on how much you let your readers know about who you are and how much you know about the subject. How reliable you are is then simply something your readers can find out by looking at the record you've created. It's a different way of thinking about how your reputation is formed.

Roberts: Well, and also another issue of considerable discussion is the issue of resources -- particularly as mainstream journalism is shrinking. Many news organizations are reducing their staff at foreign posts and other places. The blogosphere is, to some extent, filling that vacuum by producing information. But one of the arguments is that, if you have a New York Times, or Wall Street Journal, or National Public Radio for that matter, and you can afford to invest in a full-time correspondent in Beijing or can afford to invest in a three-person investigative team and spend six months uncovering misdoing, that no blogger can invest that kind of time and probably doesn't have that kind of expertise. There remain parts of this media universe that mainstream media still has to be counted on for doing. Is that a fair account? Do you agree?

Rosenberg: I think we have to be careful. There are two different trends taking place here. One is the long-term decline of newspaper publishing. There was something called the newspaper "preservation act" that Congress passed in the 1960's. So this has been going on for 50 years. It's accelerated lately. That's completely independent of the rise of the blogs. Newspapers are in decline. Most bloggers don't claim that they can somehow replace what's going away. That's a cry that you don't hear except maybe from a very small handful of extreme idealists. So the question is: newspapers are going away, blogs do represent a kind of petri dish of experiments. It's cheap to start a blog. It's easy to get going. It's an easy way to begin to look at different models for the future. Which we have no choice but to do at this point. The question about expertise is more complicated and maybe one where I do disagree with you. In an awful lot of cases, you find that a blogger who has built some authority in his realm -- economics or foreign affairs or health care reform -- the blogger often has considerably more expertise than the beat reporter who just took on that beat six months ago and is trying to get up to speed, or even the beat reporter who's done it for a number of years but who doesn't have a background in it. There's a lot of expertise online among the leading bloggers that is enhancing all of these huge and important public debates that we're having today.

Roberts: Go back to the Dan Rather case. A perfect example where there was expertise that was tapped by the blogosphere -- as we mentioned earlier -- in the typefaces and the military terminology that maybe the reporter for CBS didn't understand. At the same time, to be able to spend six months on that story and get paid by CBS -- that's an investment of manpower that's very hard for the blogosphere to duplicate. So there are ways in which, I guess, the argument still holds, but there are ways in which it doesn't.

Rosenberg: The support for that kind of investigative journalism sadly has been in decline for years also. You have less and less of that in the old media, too.

Roberts: One more point, and then I'm going to get to all of our callers... In this rapidly changing universe, blogging almost sounds old-fashioned compared to twittering or social networks like Facebook. How do you see the relationship of blogging -- which you say has been around for 15 years in some form or another -- to these newer, emerging networks and forms of communication?

Rosenberg: One of the reasons I wrote "Say Everything" is that I thought the experiences people had had in the early days of blogging -- what happens when you tell the world so much about your own life and all of the perils these people encountered like getting fired for something they posted on their blog and things like that. Those stories and experiences had more and more relevance because more and more people are putting so much of their lives online. So first of all I just see in the story of blogging this great value to all of us as we twitter and move our lives onto Facebook, all the social networking that's so popular today. The other thing that's happening is that blogging from early on was attacked or criticized as being "trivial." Who cares what you had for lunch today? I don't want to read about that -- that was the common line. Today what's happening is that people who want to express that or share that are doing it more on Twitter or on Facebook and it makes more sense to do it there. Those forms are better for that purpose. Blogs are becoming more and more substantial. They're the place where you have something significant you want to say. You want to tell a story about your life. You want to argue with...

Roberts: ... and you have more than 140 characters! ...

Rosenberg: More than 140 characters and you have the confidence that what you're writing is going to stick around.

Roberts: Directly on this point, I have an email here from Lisa [] and she writes: "I've been a mommy blogger for almost two years. It began as a way for out-of-town family to keep up with our growing children. Quickly it became a type of therapy for me as a work-at-home mother. The comments I receive from stories I post are not always what I want to hear. But the community of readers I have is always honest and the connections I feel with people I've never met is priceless."

Rosenberg: That's wonderful to hear. That experience is much more common and widespread than a lot of the coverage of blogging would indicate. There's a condescension that creeps into the conversation about blogging where people just say, "Who cares about your life!" And the truth is that millions of people may not care about your life but some number do. It's not as though when you blog about your own life you're crowding out the discussion of someone else's life. There's an infinite amount of space on the web.

Roberts: Unlike the old media where there was always a limit in time and space.

Rosenberg: Exactly.

Roberts: Linda [] writes to us from Hobe Sound in Florida. "Please ask your guest to comment on the differences and similarities between sites like Facebook and a true blog."

Rosenberg: One of the differences between Facebook, Twitter, and all social networking, and blogging, is that when you're on a social network, everything you express occurs in the context of everyone else. It's a social milieu. That's why we call it "social networking." Blogs are partly social and partly individual. They're right on the cusp or the liminal point the crowd and the individual. That's a unique place. There's nothing else quite like that on the web where you can be yourself and yet have a connection to other people that you can sort of dial up or dial down at will.

Roberts: ... I've got an email from Tony ... who says, "With 133 million blogs, how do we find the one or ones that we want to read? Is there an index, a dictionary, a yellow pages of blogs to help out those of us who want to find an interesting blog?"

Rosenberg: It's a tough question to answer because each of us is going to need a different avenue in. The best advice I give people is to ask a friend. Find someone you know who is more immersed in this world than you are and ask, "What do you read?" For me, for political blogs, I could say Josh Marshall's Talking Points Memo. For technology blogs, you might start with David Pogue at the New York Times. Then follow the links. Click on things that interest you and before you know it you'll have more than enough. You'll be pulling your hair out and saying, "How do I stop!"

Roberts: One of the things you just mentioned -- here's Josh Marshall, the classic paradigm of the independent guy who created Talking Points Memo and there's David Pogue at the New York Times and one of the things that's happened (talk about the differences between the blogosphere and the mainstream media!) is that mainstream media has coopted the blogs in some ways, or at least tried to have a share in it. Every mainstream media site has numerous blogs of its own now.

Rosenberg: The form just makes sense, you know? When we first landed on the web -- we who came from print media -- we couldn't see that this form where you just put the new stuff at the top -- made sense. It was created by people who came from the technology world mostly and they just said, "Well, this is the way to organize it." It's taken years, but finally I think it's generally understood that, "Oh, this is a good way to organize stuff!" So the New York Times now has 70 or 80 blogs and that's great. What they're still working on and getting better about is openness to the rest of the web, the willingness to link out and to say, "We're not trying to keep you hostage on our own website."

Roberts: Yes, but that becomes a financial question to some extent, right?

Rosenberg: It does. But the "let's hold readers hostage" -- the thought was that this was a good financial strategy but it really wasn't. It doesn't really work that way.

Roberts: And also, if you link to other people, you have the reciprocity where people link to you. So if you try to put up a wall, it also keeps people out. Let's turn to some of our callers here. We've got several folks who are blogging themselves. Nathan in Tulsa, OK:

Nathan: ... I'm a minister and a young pastor in a denomination that doesn't have many young pastors. I started a blog when I was in my last year of seminary and have kept it for the past five years or so. I've found it a great tool to connect with other folks in my kind of context. I've also found it a very effective tool -- I've been serving rural churches since I started the ministry -- and one thing that it's very efficient for is helping rural churches where there's a technology gap, helping them get on the web and have a presence on the web. So the two churches I've served since seminary -- we started a blog at both churches for them to share what they're doing. It's got quite a bit of hits and a lot of traffic there! I think one reason blogs are so efficient and effective for these contexts is because if you can do an email, you can do a blog. It doesn't take any more technical knowhow than that.

Rosenberg: Blogs are just a great way to create a hub of information for any community and to create a community out of people who didn't even necessarily know they were a community. So if you have this group of congregations or churches that weren't able to share information, suddenly they can. That's important to realize. Again, our conversation about blogging tends to be shaped by the concerns of people in the media who are covering the phenomenon. People in the media have been affected hugely by blogs. But the impact of this tool is so much wider and it's happening in so many more places and communities like Nathan's.

Roberts: But we do have an email from someone who says her experience is that when there are a lot of insults and rudeness and that "the anonymity that online nicknames provides has turned people ugly! Sometimes I reply to a rude blog by asking, 'Would you talk like that to the person's face?' I believe any ethical blogger should use his or her real name and make every effort to adhere to a conduct of civility when online..."

Rosenberg: Well, it's definitely been an issue. In the earliest days of blogging there were some who maintained that the principle of free speech meant that you shouldn't delete someone's comment on your blog. We've moved beyond that, I think. Most bloggers now accept that part of their role is to be a host and a moderator for the comments on their blogs. And most bloggers I know will say, "Hey, if you're going to be uncivil you're outta here!" As your blog grows it can be something that takes a lot of time. But it's sort of like maintaining your own front porch. You're going to keep the atmosphere on your blog how you want it to be. What happens over time is that people model their behavior on what they see. If you're on a blog and you see lots of other people posting rude comments, you may think, "Oh, that's acceptable here." There are lots of parts of the blog world where you find groups enormously supportive and civil. The mommy blogging world is one. There's a community called "Open Salon" -- bloggers@salon.com --that are just enormously nice to each other.

Roberts: I've noticed that certainly in a lot of the mainstream media blogs, they have a very specific caveat saying, "We have the right to delete anything. We expect people to be civil." Part of what you're saying is that it's in your interest, as a blogger, to keep things civil because otherwise people have the exact reaction of our emailers: "I don't want an ugly conversation!"

Rosenberg: That's right. The problem that some newspapers get into is they reserve that right but then don't do the work of actually moderating the forums. And there is sometimes some latent hostility in their community to them. Or there's a sense that they're not a responsive institution. So in some ways it's much harder for institutions to do this than for individuals.

Gerald: I enjoy blogging because of the validation that it offers. I blog on movies but I can see people from around world who have the same opinions that I do, you know? I like that! I like the feedback. I also have a current affairs blog where I blog on a particular subject and use some of the principles I've learned in, say, economics, to evaluate a particular situation. Like for instance the president's economic plan as it deals with education. I'll say, "Well, okay. Economics principle of supply-and-demand says the more of something there is, the less value it has. So if you increase the number you have in education, does that reduce the value of the education people have?"

Roberts: Thank you, Gerald, very much for your comment. What Gerald is bringing up is yet another dimension. The threshhold of entry has been eliminated in terms of cost. The old adage, "You've got to have a printing press to have a voice," is no longer true. Your reaction to Gerald's comments?

Rosenberg: There's a basic human need that's filled by seeing that other people appreciate what you're saying and agree with you. That's an experience I think a lot of people find. The other thing that happens is that simply writing your thoughts in public is something that, until recently, was not an option for most people who are not professional journalists or writers. Suddenly that opportunity is there and it's a different experience. When you have to compose your thoughts for public exposure, it forces you to think more clearly and carefully about issues. And even if you don't have a huge readership, that experience is valuable.

Roberts: The word he used was "validation."

Rosenberg: Yes.

Roberts: Let's talk to Chas in St. Louis, MO.

Chas: I'm a left-leaning independent voter so I'm stuck in the middle. I don't feel anyone has a voice out there saying what I want to hear. So I'm interesting in starting a blog but I'm sort of a Luddite. I don't know much about the web. What does it cost? Where do you go? Don't you have to know Dreamweaver or something in order to build a website?

Rosenberg: That was true years ago. The amazing thing I can tell you is that no, you don't really need to know too much of anything technical today. If you have a connection to the web, you can go to any number of sites -- blogger.com, wordpress.com, open.salon.com -- any of these sites and simply give them your email address, give them your name, fill out of form, click a button, and you're starting.

Roberts: They do all the work for you.

Rosenberg: Yes. Now if you want to customize it, you can get technical beyond that if you choose to or want to. But to do the basics -- to start a blog, to have your writing appear on the web in a blog form -- that's really it. Doesn't cost a cent.

Chas: One more question. How do you get people to know you have a blog out there? How do you get people to actually discover it?

Rosenberg: That's a bigger and tougher question for sure! Start with people you know, whoever's in your email address book, someone you know who's got a blog. Let them know that you're doing it. Link to them, maybe they'll link to you. If you're lucky and persistent, it can snowball.

Roberts: This is emblematic of what we've been talking about -- that with millions of blogs, not everybody is going to become famous! But part of it is, do you have something to say? And will people notice it?

Rosenberg: Yes, if you're saying something new or interesting or you're saying it in an interesting way, you can get it out there and I'm still pretty confident that people will link to you and you will be found!

Roberts: Claudia in Miami, FL, has an interesting take on this.

Claudia: I'm a frustrated writer. It has been an incredible tool for my business -- I'm a makeup artist and have been a professional makeup artist in film and TV for 20 years. I'm always asked for makeup tips. So I started a blog to help my customers learn about makeup and what utensils I use, what cosmetics I use. And it's helped me a lot.

Roberts: Helped you in terms of getting more customers? or in terms of informing your customers? How has it helped?

Claudia: Just informing my customers -- about makeup and what things are out there. That makes me more accessible because a lot of people think that, as a makeup artist in film and TV, you use very expensive things. That's not necessarily true. So I give a lot of tips.

Roberts: Thank you, Claudia. This is another example of the business world in blogging.

Rosenberg: They're saying that blogs have become the new resume, right? If you want to establish yourself in your field, what better way than to start showing your expertise in public.

Roberts: Let's turn to Sonny, in Grand Rapids, MI:

Sonny: My wife is a dynamic, incredible person who decided to stay home with our three children while they're young. The blog has become her lifeline, her connection to the outside world. It makes her life bigger than the walls that surround her -- and the screaming kids that can sometimes drive her crazy! In fact, she's gotten so into it and has connected with so many other moms like herself that she even started a website to help people design the templates and everything to make their blog an expression of who they are. It's a way to put yourself out in the world and connect in ways you can't otherwise.

Roberts: Thank you so much! This is yet another dimension. The community in cyberspace -- the old community was the neighborhood or was the social club. Now it can be world-wide.

Rosenberg: We hear the complaint that people spend too much time on the web, retreating from the rest of the world. We sometimes forget about the people whose lives...

Roberts: ... and that's not an entirely unfair argument!

Rosenberg: Absolutely. It can happen. The flip side of it is that there are people whose lives, for whatever reason -- either because they're raising three small children or they have some problem that keeps them home -- they need a way to connect with other people through this form. And they can.

Roberts: You also look into the future -- where this is going. Blogging, you say, is kind of a mature form and you don't see blogging itself changing very much. But there are new forms developing all the time. You mention Twitter and Facebook. But you also talk about the role of video in blogging.

Rosenberg: Well, there's this movement of people who are really recording their lives -- audio and video -- and streaming it all out on the web. It's called "life-logging" and it's fascinating! It's a whole nother dimension of self-exposure. I see blogging as being much more traditional than that. When you blog, you're actually crystalizing moments from your life and writing about them and putting them out there. You're being selective. The life-logging phenomenon is much more about just letting it all ... putting everything out in public, not being selective. So, again, if that becomes more common, as I think it will, it will leave blogs as more of this kind story-telling form, a way of telling our history, putting our history together on the web so that people in the future can look at it and say, "Wow! That's what it was like to live in 2009?"

Roberts: This is such an interesting point. People bemoan the advent of the web, destroying letter writing, destroying diaries. All of the fabric of history. I've done this in several books, borrowing heavily from letters. So does my wife. What you're saying is that there is a form being created that's not a hand-written letter but is a documentary record that will be there for future historians.

Rosenberg: There are more people writing about their lives today than ever before in history. How can that be a bad thing for future historians? Their problem is going to be, "How do we organize all this stuff?"

Roberts: How do you save it?

Rosenberg: Stuff that's digital today is saved. In the internet archive, I was able to find basically all of the blog posts I needed to find from 1995 on. Once something is in digital form, it rarely disappears.